Peterson v. Islamic Republic of Iran

This matter comes before the Court on various post-judgment motions including: motions [273, 297, and 306] by the Japan Bank for International Cooperation ("JBIC"), the Bank of Japan ("BOJ"), and the Export Import Bank of Korea ("KEXIM") to quash writs of attachment on judgment, and plaintiffs' motion [286] for appointment of a receiver. Upon consideration of the motions, the oppositions and replies thereto, the applicable law, and the entire record herein, this Court finds that the garnishees' motions to quash should be GRANTED, and plaintiffs' motion for appointment of a receiver should be DENIED.

I. BACKGROUND

These actions arise from the October 23, 1983 bombing of a United States Marine Corps barracks in Beirut, Lebanon, in which 241 American servicemen operating under peacetime rules of engagement were murdered by a suicide bomber. Plaintiffs alleged that the Islamic Republic of Iran ("Iran") and the Iranian Ministry of Information and Security were liable for damages from the attack because they provided material support and assistance to Hezbollah, the terrorist organization that orchestrated and carried out the bombing. Plaintiffs relied upon the state-sponsored terrorism exception to jurisdictional immunity of the Foreign Sovereign Immunities Act ("FSIA"). See 28 U.S.C. § 1605(a)(7).*fn1 On March 17-18, 2003, this Court conducted a bench trial to determine the defendants' liability for their part in the perpetration of this attack. After reviewing the evidence presented by plaintiffs at trial, including testimony from lay and expert witnesses, this Court issued an opinion finding that the defendants were legally responsible for providing material financial and logistical support to help carry out this tragic attack on the 241 servicemen in Beirut in 1983. Peterson v. Islamic Republic of Iran, 264 F. Supp. 2d 46, 61 (D.D.C. 2003). On September 7, 2007, this Court entered a default judgment in favor of plaintiffs and against defendants in the total amount of $2,656,944,877.

Plaintiffs now seek to levy execution and collect on that judgment. Plaintiffs directed post-judgment, third-party subpoenas to individuals, corporations, international organizations, and financial institutions that may have information regarding Iranian assets that could be used to satisfy plaintiffs' judgment. JBIC, BOJ, and KEXIM were among the financial institutions served with the subpoenas. All three institutions now move to quash the writs of attachment on sovereign immunity grounds. Plaintiffs move this Court to enter an order appointing a receiver to direct specified foreign and international garnishees to pay funds to satisfy the judgment. Plaintiffs assert that the garnishees' immunity claims would become moot if this Court ruled in plaintiffs' favor on the motion to appoint a receiver.*fn2 JBIC and KEXIM, along with the World Bank and the International Finance Corporation ("IFC"), oppose plaintiffs' motion to appoint a receiver arguing that a receivership cannot overcome sovereign immunity. As it is this Court's opinion that the motions to quash and the receivership motion both rest on whether the garnishees are properly entitled to sovereign immunity, the Court will begin with that issue.

II. DISCUSSION

A. Sovereign Immunity as a Basis to Quash the Writs of Attachment

The FSIA "provides the sole basis for obtaining jurisdiction over a foreign state in the courts of this country." Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993) (internal quotations omitted). Under the FSIA, a foreign state is immune from the jurisdiction of American courts unless the case falls within a statutory exception. 28 U.S.C. § 1604; see id. §§ 1605-1607. If no exception applies, the district court lacks subject matter jurisdiction. Id. § 1604; see also Foremost-McKesson, Inc., et al. v. Islamic Republic of Iran, 905 F.2d 438, 443 (D.C. Cir. 1990) (where no exception applies, FSIA provides "immunity from trial and the attendant burdens of litigation, and not just a defense to liability on the merits"). If an exception does apply, the district court has jurisdiction. Id. § 1330(a); see Kilburn v. Socialist People's Libyan Arab Jamahiriya, 376 F.3d 1123, 1126 (D.C. Cir. 2004).

It is the defendant's burden to prove that a plaintiff's allegations do not fall within the bounds of an FSIA exception. Mwani v. bin Laden, 417 F.3d 1, 15 (D.C. Cir. 2005) (citing Kilburn, 376 F.3d at 1131). "If the defendant challenges only the legal sufficiency of the plaintiff's jurisdictional allegations, then the district court should take the plaintiff's factual allegations as true and determine whether they bring the case within any of the [FSIA] exceptions to immunity invoked by the plaintiff." Id. "But if the defendant challenges the factual basis of the court's jurisdiction, . . . the court must go beyond the pleadings and resolve any disputed issues of fact the resolution of which is necessary to a ruling." Kilburn, 376 F.3d at 1127 (internal quotations omitted).

As a preliminary matter, this Court shall first address plaintiffs' contention that the garnishees' assertion of sovereign immunity is misplaced since plaintiffs seek only to levy upon assets of Iran rather than upon JBIC itself. Plaintiffs' logic defies controlling authority and the language of the FSIA. As this Court explained in Flatow v. Islamic Republic of Iran, 74 F. Supp. 2d 18, 20 (D.D.C. 1999), attachment of funds possessed by a sovereign constitutes a suit against that state, which is barred by the doctrine of sovereign immunity. Indeed, principles of sovereign immunity apply with equal force to attachments and garnishments. Id. at 21 (citations omitted). Further, if the garnishees enjoy sovereign immunity, then under the FSIA they are therefore immune from any "jurisdiction of the courts of the United States." 28 U.S.C. § 1604. The primary issue for this Court to resolve, therefore, is whether each of the garnishees is immune from this Court's jurisdiction under the FSIA.

1. JBIC's Entitlement to Sovereign Immunity

In April 2008, plaintiffs directed third-party subpoenas to JBIC's Washington, D.C. and New York City offices inquiring about any information that JBIC may have regarding assets of Iran and other named defendants. JBIC objected to the subpoenas by letter asserting sovereign immunity. Plaintiffs subsequently directed the U.S. Marshal to serve JBIC with a writ of attachment seeking to garnish any credits, accounts, or debts JBIC may hold for any of the defendants. JBIC moves to quash the writ on grounds that it is immune from the jurisdiction of this Court.

JBIC maintains that as an "agency or instrumentality" of the Japanese government, it possesses sovereign immunity both under international law and the laws of the United States. An agency or instrumentality of a foreign state is considered a foreign state for FSIA purposes, 28 U.S.C. § 1603(a), and is therefore "immune from the jurisdiction of the courts of the United States." 28 U.S.C. § 1604. To qualify as an agency or instrumentality of a foreign state, an entity must be: (1) "a separate legal person, corporate or otherwise;" (2) "an organ of a foreign state;" and (3) "neither a citizen of a State of the United States . . . nor created under the laws of any third country." 28 U.S.C. § 1603(b). According to JBIC, it was established by Japanese statute in 1999 to consolidate the Japanese government's foreign trade and development aid efforts and policies. (See JBIC's Mem. Supp. Mot. Quash 1.) JBIC further represents that its capital is wholly owned by the Japanese government and that JBIC is under the direct control of the Japanese Minister of Finance and the Japanese Minister of Foreign Affairs. (See id.) Given the foregoing, this Court has no doubt, and plaintiff does not dispute, that JBIC is an "agency or instrumentality of a foreign state" as defined under 28 U.S.C. § 1603(b).*fn3 Accordingly, this Court must grant JBIC's motion to quash, unless plaintiffs can identify a specific statutory exception to JBIC's immunity.

Plaintiffs claim that JBIC is deprived of immunity under the FSIA's commercial activity exception. That exception provides that a foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case:

[I]n which the action is based upon a commercial activity carried on in the United States ...

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